November 14, 2007
November
14, 2007
Xxxxx
Ventures
7
Xxxxxxxx Xxxxx St.
Ramat
Gan
52521
Israel
Ladies
and Gentelmen,
Reference
is hereby made to that certain Letter Agreement entered into between us on
March
28, 2007 (the "March
'07 Loan Agreement")
pursuant to which you have agreed to lend IXI
Mobile, Inc., a Delaware corporation (the "Company")
an
aggregate total principal amount of up to $ US$2,000,000 (the "March
'07 Loan").
Such
loan was guaranteed by IXI
Mobile (R&D) Ltd.,
an
Israeli limited liability company and the Company's wholly owned subsidiary
(the
"Subsidiary").
Further
reference is hereby made to that certain Letter Agreement (as amended) entered
into between us on June 19, 2006 (the "June
'06 Letter Agreement")
providing for the extension by you of a guaranty previously provided by you
to
Bank Leumi Le’Israel Ltd. (the "Bank")
to
secure the obligations of the Subsidiary in connection with that certain line
of
credit (the "LOC")
and
loan (the "June
'06 Loan")
obtained by the Subsidiary from the Bank in the aggregate principal commitment
amount of $8,000,000.
The
purpose of this Letter Agreement is to set forth the terms and conditions of
our
understanding and agreement relating to the repayment of the principal amount
under the March '07 Loan and the remainder of the unconverted principal amount
of the June '06 Loan, by way of converting such amounts into fully
paid and non-assessable shares of the Company's Common Stock, par value $0.0001
per share (“IXI
Stock”).
Unless
otherwise defined below, all capitalized terms herein shall have the meanings
assigned to such terms in the March '07 Loan Agreement.
|
1.
|
Repayment
by Conversion.
|
|
1.1.
|
Current
Unpaid Principal Amount of March '07 Loan.
By your signature below you acknowledge and agree that the principal
amount owed by the Company to you under the March '07 Loan as of
the date
hereof, is $2,000,000 (being the entire outstanding principal (the
"Converted
Debt")).
|
|
1.2.
|
Repayment
by Conversion of Debt.
Notwithstanding anything to the contrary in the March '07 Loan Agreement,
you hereby elect to convert the Convertible Debt under the March
'07 Loan
into 555,556 shares of IXI Stock.
|
| 1.3. |
Assumption
and Conversion of Debt.
Notwithstanding anything to the contrary in the June '06 Letter Agreement
you hereby elect: (i) to assume the remaining portion of the debt
currently owed by the Subsidiary to the Bank under the LOC in the
amount
of $592,000 (the "Assumed
Debt");
and (ii) to, concurrently upon said assumption, convert each your
respective portion of the Assumed Debt into 164,444 shares
of IXI Stock.
|
|
1.4.
|
Warrant
Coverage.
As an inducement to you to convert the Converted Debt and Assumed
Debt
into shares of IXI Stock, the Company will issue to you, in addition
to
the shares of IXI Stock issued to you under Sections 1.2 and 1.3
above, a
warrant (the "IXI
Warrant")
to purchase 432,000 of IXI (equaling 60% percent of the number of
shares
of IXI Stock issued to you upon conversion of the Converted Debt
under
Sections 1.2 and 1.3 above). The IXI Warrant shall be substantially
in the
form attached hereto as Exhibit
A.
|
|
1.5.
|
Termination
of Repayment and Guarantee Obligations.
You hereby agree that upon conversion of the Converted Debt and Assumed
Debt into IXI Stock and issuance to you of the IXI Warrant, the Company's
repayment obligations and the Subsidiary's guarantee obligations
with
respect to the Converted Debt pursuant to the March '07 Loan Agreement
and
the Subsidiary's repayment obligations and the Company's guarantee
obligations with respect to the Assumed Debt pursuant to the June
'06
Loan, shall terminate and be deemed fully discharged and satisfied
and the
March '07 Loan Agreement and June '06 Loan Agreement shall terminate
and
be of no further force and effect with respect to the Converted Debt
and
Assumed Debt.
|
2. Representations
and Warranties.
A. You
hereby represent and warrant as follows:
(a) You
have
all requisite power and authority to execute, deliver and perform this Letter
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Letter Agreement you, the fulfillment of and
the compliance with the respective terms and provisions hereof and thereof
and
the due consummation of the transactions contemplated hereby, have been duly
and
validly authorized by all necessary action on your part. This Letter Agreement,
when executed and delivered by you, will constitute valid and legally binding
obligations on you, enforceable in accordance with their terms.
(b) You
acknowledge that the IXI Stock and IXI Warrant (collectively, the "Securities")
you
receive are not registered under the United States Securities Act of 1933,
as
amended (the "1933
Act"),
or in
any state and that you must hold such Securities for an indefinite period unless
the Securities are subsequently registered or a Federal and state exemption
from
such registration is available.
(c) You
are
acquiring the Securities for your own account, as a profit-motivated investment,
and without the participation of any person in any part of such acquisition.
You
do not intend to divide your participation with others or to resell or otherwise
dispose of all or any part of the Securities in violation of the Securities
laws
of the United States.
(d) You
have
ad full access to any and all information with regard to the transaction
contemplated hereunder and the Company, including financial statements and
other
documents, that you deem relevant to the acquisition, and you have had full
access to
management
of the Company to obtain whatever information you deemed relevant to your
acquisition of the Securities. You acknowledge that you have received all
information requested from the Company and are satisfied with all such
information, and no additional information is needed or required for execution
of this Letter Agreement.
(e) You
understand that the purchase of the Securities involve substantial risk. You
confirm that you have experience as an investor in securities of companies
in
the development stage and acknowledges that you re able to fend for yourself,
can bear the economic risk of your investment in the Securities and have such
knowledge and experience in financial or business matters that you are capable
of evaluating the merits and risks of this investment in the Securities and
protecting your own interests in connection with this investment.
(f) You
understand that the Securities are characterized as "restricted securities"
under the 1933 Act and Rule 144 promulgated thereunder inasmuch as they are
being acquired from the Company in a transaction not involving a public
offering, and that under the 1933 Act and applicable regulations thereunder
such
securities may be resold without registration under the 1933 Act only in certain
limited circumstances. In this connection, you represent that you are familiar
with Rule 144 of the U.S. Securities and Exchange Commission, as presently
in
effect, and understand the resale limitations imposed thereby and
by
the
1933 Act. You understand that the Company is under no obligation to register
any
of the Securities.
(g) You
are
either (i) not a “U.S. Person” as such term is defined in Rule 902 (the
provisions of which are known to such Lender) promulgated under the 1933 Act,
or
(ii) an “accredited investor,” as such term is defined in Rule 501 (the
provisions of which are known to such Lender) promulgated under the 1933
Act.
(h) At
no
time were you presented with or solicited by any publicly issued or circulated
newspaper, mail, radio, television or other form of general advertising or
solicitation in connection with the offer, sale and purchase of the
Securities.
B.
We
hereby
represent and warrant as follows:
(a) Authority.
We have
all necessary corporate power and authority to execute and deliver this Letter
Agreement and the Warrant, (the Letter Agreement and the Warrant are
collectively referred to as the "Transaction
Agreements"),
to
perform our obligations hereunder and thereunder and to consummate the
transactions contemplated hereby or thereby. The execution and delivery of
the
Transaction Agreements by us and the consummation by us of the transactions
contemplated hereby or thereby have been duly and validly authorized by all
necessary corporate action, and no other corporate
proceedings
on our part are necessary to authorize the Transaction Agreements or to
consummate the transactions contemplated hereby or thereby. Each of the
Transaction Agreements has been duly and validly executed and delivered by
applicable parties and constitutes a legal, valid and binding obligation of
us,
enforceable against us in accordance with its terms subject to the effect of
any
applicable bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting creditors' rights generally and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding at law
or
in equity). The Company’s Board of Directors (the "Board")
has
approved this Agreement, the Transaction Agreements and the transactions
contemplated hereby or thereby and such approvals are sufficient so that the
restrictions on business combinations set forth in any Federal or State laws
or
regulations applicable to us and no other “fair price,” “moratorium,” “control
share acquisition” or other similar anti-takeover statute or regulation, (and
any similar provisions, each a “Takeover
Statute”),
and
no anti-takeover provision in our amended certificate of incorporation or
by-laws shall not apply to any of the transactions contemplated hereby or
thereby, including, but not limited to, any exercise of the Warrant.
(b) No
Conflict; Required Filings and Consents.
(a) The
execution and delivery of the Transaction Agreements by us do not, and the
performance of this Letter Agreement and the Transaction Agreements by us will
not, (i) conflict with or violate our Certificate of Incorporation or By-laws,
(ii) conflict with or violate any United States or other statute, law,
ordinance, regulation, rule, code, executive order, injunction, judgment, decree
or other order ("Law")
applicable to us or by which of our any property or asset is bound or affected,
or (iii) result in any breach of or constitute a default (or an event which,
with notice or lapse of time or both, would become a default) under, or give
to
others any right of termination, amendment, acceleration or cancellation of,
or
result in the creation of a lien or other encumbrance on any of our property
or
asset pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation, except,
with respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in
the
aggregate, have a material adverse effect on us.
(c) Our
execution and delivery of this Letter Agreement and the Transaction Agreements
do not, and the performance of this Letter Agreement and the Transaction
Agreements by us will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any foreign, United States
federal, state, county or local or non-United States government, governmental,
regulatory or administrative authority, agency, instrumentality
or
commission (including any stock exchange or inter-dealer quotation system)
or
any court, tribunal, or judicial or arbitral body.
(d) SEC
Filings; The
Company has filed all forms, reports and documents required to be filed by
it
with the Securities and Exchange Commission (the "SEC")
since
June 6, 2007, and such filings are available to you, in the form filed with
the
SEC, all forms, reports and other registration statements filed by the Company
with the SEC (such forms, reports and other documents referred to above being,
collectively, the "Company
SEC Reports").
The
Company SEC Reports (i) were prepared in accordance with either the requirements
of the Securities Act of 1933, as amended (the "Securities
Act"),
or
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"),
as
the case may be, and the rules and regulations promulgated thereunder existing
at the time the Company SEC Reports were filed, and (ii) did not, at the time
they were filed, or, if amended, as of the date of such amendment, contain
any
untrue statement of a material fact or omit to state a material fact required
to
be stated therein or necessary in order to make the statements made therein,
in
the light of the circumstances under which they were made, not misleading.
No
Subsidiary is required to file any form, report or other document with the
SEC.
(e) Valid
Issuance of Common Stock.
The
Common Stock that is being purchased by you hereunder, when issued, sold and
delivered in accordance with the terms of this Agreement for the consideration
expressed herein, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under the Transaction Agreements and under applicable
state and federal securities laws. The shares of Common Stock issuable upon
exercise of the Warrant have been duly and validly reserved for issuance and,
upon issuance, will be duly authorized, validly issued, fully paid and
nonassessable and will be free of restrictions on transfer other than
restrictions on transfer under this Letter Agreement and the Transaction
Agreements and under applicable state and federal securities laws.
(f) Brokerage.
There
are no claims for brokerage commissions, finders' fees or similar compensation
in connection with the transactions contemplated by this Letter Agreement and
the Transaction Agreements for which you will have any liability or
responsibility based on any arrangement or agreement binding upon the Company
or
Subsidiary.
3. We
further note your consent to our providing copies of this Letter Agreement
to
potential PIPE investors as well as to NASDAQ and/or any other US governmental
authority.
4. This
Letter Agreement may be executed in two (2) or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and
the same instrument. The parties agree that facsimile signatures shall be
binding.
5. All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (a) upon personal delivery to the party to be notified,
(b) when sent by confirmed facsimile if sent during normal business hours
of the recipient, if not, then on the next business day of the recipient,
(c) three (3) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent the
party's address set forth in the
header
of
this Letter Agreement or at such other address as any party may designate by
ten
(10) days advance written notice to the other parties hereto.
6. Any
term
of this Letter Agreement may be amended and the observance of any term of this
Letter Agreement may be waived (either generally or in a particular instance
and
either retroactively or prospectively), only with the written consent of all
the
parties hereto.
7. This
Letter Agreement shall be governed by and construed under the laws of the State
of Delaware, exclusive of the provisions thereof governing conflicts of
laws.
Sincerely,
|
|
IXI
MOBILE (R&D) Ltd
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Name:
|
|||
|
Title:
|
Title:
|
|||
[IXI
Signature Page to Conversion Letter Agreement]
|
XXXXX
VENTURES LTD.
|
|||
|
By:
|
|
||
|
Name:
|
|
||
|
Title:
|
|
||
[Xxxxx
Signature Page to Conversion Letter Agreement]
